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Spare 46 coal blocks, scrap others, govt to SC

The government on Monday appealed to the Supreme Court not to cancel all the coal blocks that have been declared illegal. Attorney general Mukul Rohtagi told the court that 40 of the 218 coal blocks in the country were ready for production and they should not be scrapped.

india Updated: Sep 02, 2014 09:51 IST
HT Correspondent
HT Correspondent
Hindustan Times

The Attorney General asked the Supreme Court on Monday to spare 46 of 218 coal blocks allocations declared illegal last week as they had had already begun production or were close to doing so, but said the Centre would have no problem if the court cancelled the blocks.

Attorney General Mukul Rohatgi suggested companies mining the 46 blocks should be directed to pay up for the losses incurred by the exchequer due to the illegal allocation but added the NDA government was open to re-auctioning the coal blocks if they were cancelled. The government was not championing anyone’s cause, he added.

The Supreme Court on August 25 declared all coal block allocations between 1993 and 2010 illegal but stopped short of cancelling them, a verdict that cast a shadow of uncertainty over investments running into thousands of crores in the sector that is crucial for the revival of the economy.

As the Attorney General was unable to provide a specific list of the blocks, the court asked the government to submit a list of operational mines by September 8 and said the next hearing will be held on September 9.

According to the coal ministry website, 27 coal blocks were already producing as of last year and several others are on the verge of starting production.

Top companies that have been producing coal include RPG Industries at the Sarisatolli coal block in West Bengal, Hindalco Industries at Talabira in Odisha, Jindal Steel and Power Ltd in Gare-Palma in Chhattisgarh, Prakash Industries at a coal block in Chotia in Chhatisgarh and Usha Martin Ltd at a coal block in Katuria, Jharkhand. More coal blocks are likely to start producing soon this year, according to the coal ministry.?

The bench said it would pass orders only after hearing the Coal Producers Association, Sponge Iron Manufacturers Association and Independent Power Producers Association of India which represent coal manufacturing companies.

But the Attorney General opposed a court suggestion to set up a committee to recommend appropriate action and said companies mining the 46 blocks should be asked to pay for the losses incurred by the exchequer due to the illegal allocation.

“The CAG estimates the loss was at Rs 295 per tonne. We should proceed on that basis and ask the allottees to refund the money. Calculations must be done from the date when mining began at these blocks. Our endeavour is to finish the process of re-allocation at the earliest,” Rohatgi said. A Comptroller and Auditor General report estimates the coal scam cost the exchequer Rs 1.86 lakh crore in losses.

Companies that get mining leases to provide coal for power generation will have to sign a power purchase agreement with state governments assuring them of supplies in case they want to continue with their allocation, he added.

Rohatgi said of the 218 blocks, the government had cancelled 80 even before the Supreme Court verdict came. The government has sought exemption for 46. Twelve of the remaining 92 are for Ultra Mega Power Projects (UMPP) that would not be cancelled in line with the court’s September 25 judgment. Any cancellation will only affect 80 blocks.

“We will auction all the 160 blocks (80 already cancelled by government and 80 others likely to be cancelled by the SC) without any delay and we do not want any committee to decide the consequences of the judgment. This country needs power and it’s important to get these mines rolling,” Rohatgi said.

NGO, Common Cause and advocate Manohar Lal Sharma had challenged the allocations through separate PILs. While Sharma called for cancellation of all the blocks, Common Cause lawyer Prashant Bhushan said gradual de-allocation should take place, just as it did when 2G licenses were cancelled two years ago.